Indian Information Technology (IT) Industry is going downhill. As is usual, the companies will look at outside factors. However, if they think little more, one very strong reason is that the large IT development companies are looking at “how to develop software” and “how to evaluate software”, only. There is another key question which is “what software to develop?” Specifically, Indian IT companies are focused predominantly on how part of software innovation triangle. Indian IT companies need to focus on “what” part of the software innovation triangle, as it not only has more value but it is that leg that one can protect by ways of IP rights as well.
The Software Innovation Triangle – One What and Two Hows
Software has been defined as instructions and data structures (computer programs) that when executed on a machine provides desired function and performance along with documents that describe the operation and use of programs.
A very useful definition of innovation is successful creation of change by (new) ideas. Combining the above, software innovation has to be successful creation of change by new ideas in developing computer instructions, data structures and associated documents. This should include how to develop software, how to evaluate software and also what software to develop to achieve desired functionality and performance to meet a need or set of needs. I call this the software innovation triangle – the two “how’s” and one “what” of software innovation.
Typical Application Maintenance (AM) Projects
if one looks at a typical application maintenance (AM) project/program – the “bug-fixing” jobs – that constitute more than half of Indian IT Jobs on which these companies have built their campuses and brand value, the process efficiency (a metric of how much “end-value” adding time as a percent of total time spent ) is around 35% or less. It means 65% time and effort is wasteful. It was but obvious that technology solution would be needed. A cloud based model is current possibility. Very early an interesting model by Microsoft has been proposed. When MS Office crashes – there is a pop-up application which seeks permission of the users to report to Microsoft the bug. A patent was also granted to Microsoft in 2003 on that application. Logically these solutions – such as application that captures the memory offset on a failure – should have been developed and protected by Indian IT companies. Same is true for cloud computing models. But given the “intellectual vacuum” of Indian IT top leadership – and a focus on billing rates and billability of the head count – we lost an opportunity to possibly define the future. It’s a loss.
Indian Information Technology (IT) companies should have understood and seen this coming in early last decade itself. Instead of planning and executing the next wave – they simply paid lip service to (a) creating, owning, protecting and monetizing their intellectual property (b) Making products as the basis of future growth (c) building a real R&D base (d) defining the next wave instead of following others (e) moving away from billing rate based – “body shopping” model. Leadership of these companies should be blamed – as they continued to be followers and fulfilling their US client-masters by providing the so called “cheap jobs” instead of “Steve jobs”. However – we still can act in vectoring our resources, energies and capabilities to define the future – not in terms of creating more jobs but creating more capabilities to build the nation!! A deep focus on science, technology, engineering and product creation is needed! Let’s hope we will create the future that we define.
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Navneet Bhushan (Navneet) is a founder director of CRAFITTI CONSULTING (www.crafitti.com) – an Innovation and Intellectual Property Consulting firm focused on co-crafting Innovation in global enterprises. He is the winner of Indira India Innovation award for Entrepreneurship and Innovation Leadership for 2012. He is the principal author of Strategic Decision Making- Applying the Analytic Hierarchy Process published by Springer-Verlag, UK, as part of the Decision Engineering Series. Read Navneet Bhushan Profile. Read Navneet Bhushan Columns.
Sometimes people are hell bent upon eating the hand that is feeding them.
While its glorifying to talk about the Product development triangle and all the stuff that Mr. Naveen talks and classifies the Indian IT industry as ‘Body Shopping’ and address the Indian IT companies as ‘these companies who have built campuses’ (as if building something is evil) must understand that we have more than 100 Bl people to feed in our country and Indian IT companies have done a great job creating jobs for millions along with creating tremendous wealth. While I am a strong proponent of products and innovation.. what Mr Navneet does not understand that it takes money, infrastructure, investment climate and acceptance culture to get that going.. In India we do not have that. Our strength is people and technology… and Services companies are best placed to utilise that strength.
Dear Indian IT – I must say, I have an intuitive guess of your identity! Since, you fear so much, I will not get into that.
Thank you for pointing out what I do not understand. I disagree 50% on what you says is our strength – number of people is definitely our strength. Technology – well I disagree – we have not seen technology creation by India – and I am specifically talking about Indian IT companies. If you are saying our strength is understanding someone else’s technology, then also given the number of people who are involved – we should have done a better job. If you are saying applying technology to solve some industry problem in an original form – once again our Indian IT companies have not done justice to the potential that we had.
On building campuses – my indication is you can understand Mr. Indian IT – not to suggest that “building something is wrong” – but to suggest – that if the companies had spent say 50% of that money on R&D and creating Intellectual Property, may be we could have built 5 times more campuses (if that indeed is the aim) – but given the limited focus on next Quarter billing rate based revenues, we have missed an opportunity to define the future – that I sincerely believe we were in a position about a decade back. At that time, we were so happy in the glory of the reflected green US dollars that we continued to follow the diktats of client-masters. Our leadership failed, failed miserably. Now, we are faced with big campuses, low margin peoples and a scale-up model that is becoming increasing difficult to sustain. In every company, worth its salt, in the IT Services game, they gave lip service to “change” – but it was not possible to create change as the companies were radically short-sighted and of-course now we do not have people who can define the future – who really can look at key problems to solve, key opportunities to explore and key directions to create. The reasons are very clear to me – the glorified “technologists” who worked on these projects, who worked in these companies – managing those bug-fixing programs – and thinking themselves to be doing “technology” – are not able to fit in a world that is changing, rapidly if you may – by technology change, or by business drivers or by sheer change in the fundamental principles of how global work is carried out. We have “managers” who may manage people for maintenance projects, but the day you ask them to define a new project, think about the next – they are stunned, shocked and completely silenced – which leads to the reactions like above. I sincerely hope, the new crop of people who come into the professional career create their own companies rather than follow the ” our strength is people” hence we only do services – the “loser manifesto” that has infested our IT companies. Hope the “IndianIT” will be more transparent to understand the internal problems – rather than pointing out to external environment.
Mr Vijeesh Papulli (responded on Linkedin, thus…)
“Thanks for sharing your thoughts & I agree to your observations on the emphasis that’s currently on for the ‘Hows’ and not the ‘What’. The irony is that many in the IT industry know this problem but as you said so bend upon pursuing the short term goal of improving the billing rates, improve process efficiency, etc. I personally believe that most of the IT companies lack a long term vision on where they want to be. This is followed up with Strategy which is relatively short term and over emphasis on pleasing the stock market which basically means steps like ‘What’ which may not give immediate returns get brushed under the carpet or don’t get the right level of management & board attention.”
Mr. D.V.R.S. Pavan Kumar (responded on Linkedin, thus …
“I agree to your point and still I remember these words when you spoke about when we are colleagues in Wipro. Predominantly, our IT companies playing safely with IT service domain and their long term visionary power are tackling the strategies around providing best services in IT services rather than what is needed the industry. That will come through the question “What” and our companies’ should focus on that point continuously and prepare a long term strategy around that goal. Otherwise, our Indian IT industry will sneeze whenever US and Europe countries have the cold…..”
Mr. Tathgat Verma (responded via email..
I am reminded of the Indian manufacturing, especially the automotive sector, in pre-1991 days. Bajaj was happy as long as out-of-options middle-class stood all-night to book ‘Priya’ scooter (even under the NRI quota!), and once they got the allotment, even if that was 5 years down the line, they were literally on top of the world. Similarly, Hindustan Motors were happy that there was no competition/threat and hence they were churning out the same old chasis that they had done for several decades before. In the ‘short-term’ vs ‘long-term’ battle, all the license raj beneficiaries were happy chasing short-term dollars, because, I think they never expected the license raj to end. The simply didn’t invest their R&D dollars for a long-term sustainability.
Thankfully, 1991 happened!
I am hoping a similar watershed event will happen to Indian IT industry that will force services house to finally wake up out of their comfort zone…
regards,
Tathagat
This is a common NPD problem for Indian Companies and in that sense it is not specific to IT Services segment . More than 80 % of the work we do there is for some other IT Services Company of US Origin, who directly interact with the Real Clients – as I come to understand .
Mr. Ranjan Ghosh, (responded via email ….
Navneet,
This is a very thought provoking article. The issue is well known, but what is the way out?
What are the reasons for not doing the obvious by the IT giants? Why Israel more startup than India and gets top $ funding?
Ranjan Ghosh
Dr. Arun Kumar Kashyap (commented on Linkedin, …
Technology has been a synonym of IT. Past 25 years or so have seen IT sector and MBA lobby dictating the Indian industry landscape and has been the singular factor to see the decline in the number of MTech/ PhDs produced in the country.
Vijeesh Papulli responded to Dr Arun’s comment above
” An excellent point Dr. Arun Kumar! It’s sad that MTechs & Phd numbers in India are falling while in China there is a tremendous increase in these numbers (I understand China stands number 1 for patent obtained in 2011 ahead of even USA). Coming back to IT companies in India’s R&D spend is supposedly about 2 to 4% of total revenue & even this is more of an backward calculation at the end of the year than actual budget allocation for R&D purposes. The exact % if true is not bad when compared other global companies but in my previous life as a presales guy, I have been amazed & shocked at how companies have come up with this figure! Puting it bluntly it has been more a calculated guesswork! “
Dr Arun Kumar Kashyap on Linkedin….
Navneet makes sense. It is well known that intangibles constitute about 85-90% of the total assets of a global company. On that scale, the value of the IP created by Indian IT companies should be equal to about 85-90% of their total assets. If not, the IT companies need to do some soul searching.
Navneet’s thoughts must be provocative to the IT companies of our country. In fact not only IT companies but every industry segment. If I am not going too far it is another type of slavery. For India to be a strong economical power we need to set our innovation record right. our performance in world scenario is dismal. China has suddenly come on the world innovation (and IP) map so quickly from no where. Of course it is the democratic system of India that is to be blamed. without Innovation I am sure our dreams of 2020 that ex-president Abdul Kalam has set forth would remain a far cry. The current scenario is proof enough how much our Govt can do and thus onus has to fall on the shoulders of the business houses large and small.